Trading in green throughout the day, the benchmark BSE Sensex garnered 173.93 points to settle at over a one-week high of 25,494.37, while the broader NSE Nifty finished slightly above 7,750-mark.

Sentiment also got a lift from Finance Minister Arun Jaitley's assurance that the proposed Goods and Services Tax (GST) rate would be less than 18 percent and on likely scrapping of 1 percent additional tax.

The Congress has been stalling passage of the GST bill in Rajya Sabha where the ruling NDA is in a minority. Elsewhere, Asian and European markets were in better shape as investors saw a 25-basis point rate hike by the Fed already factored in.

The US Federal Reserve is widely expected to announce a hike in interest rate, first in nearly a decade, when its two-day policy-setting meeting ends later today.

"Investors believe that post Fed rate hike, markets will stabilise as the overhang of a rate hike will be shrugged off," said Gaurav Jain Director Hem Securities.

The 30-share Sensex resumed higher at 25,402.47 and continued to rise to touch the day's high of 25,572.90. It finally settled 173.93 points or 0.69 percent higher at 25,494.37, its highest closing since December 7. The gauge had gained over 276 points in the past two sessions.

The NSE Nifty after moving between 7,776.60 and 7,715.75, ended 50.00 points or 0.65 per cent higher at 7,750.90. ONGC topped the gainers list among BSE stocks by surging 3.90 per cent to Rs 226.55 while RIL closed 0.22 percent up at almost three-week high of Rs 978 as global crude rebounded from a six-year low.

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